Moneylady
5770 Hurontario Street, suite 600 L5R 3G5 Mississauga, ON, Canada

HOW MANY YEARS WILL YOUNGER CANADIANS NEED TO FINANCIALLY RECOVER FROM THE PANDEMIC? Source: By Ephraim Vecina /MBN/ Feb 9, 2021. Younger Canadians might need as much as a decade to recover economically from the COVID-19 pandemic, raising questions about the near-future stability of the housing market.... Scott Terrio, a consumer insolvency manager at the Ontario-based Hoyes, Michalos & Associates, Licensed Insolvency Trustees, said the pandemic's negative financial impacts will likely compound the indebtedness that the younger generations, like millennials and Gen Zs, are already laboring under. "I can easily see it being 10, because 10 years goes by fast," Terrio told CTV News. "I think a lot of people will take issue with that number - but if you do my job long enough and deal with people who are in normal debt situations, this is abnormal." Terrio said that COVID-19 vaccinations will help promote consumer confidence among the youth, as "people want to spend," but wiping out COVID-19 may prove a tough nut to crack. Leading health officials such as the United States' Anthony Fauci have set the baseline vaccination rate at 70%-85% for society to safely return to its pre-pandemic normal. At Canada's current speed of vaccination roll-out (15,848 doses per day), the Bloomberg Vaccine Tracker estimated that the country will take more than 10 years to inoculate at least 75% of its population. Terrio also noted that a crucial component of younger Canadians' fiscal recovery will be federal policies aimed at stimulating employment growth, since industries that had staffing cuts during the height of the pandemic won't "magically" be able to rehire their former employees. "I can't see employment rolling back out evenly, in any kind of quick way, because there's going to be a lot of businesses not there anymore," Terrio said. "I've been meeting with people for 10 months now whose jobs were just basically vaporized in March and - people in their twenties are in industries that have just been crushed - they've probably paid a bigger price than almost any other demographic."

CANADA'S REVERSE MORTGAGE GIANTS HAD A MONSER 2020. Source: By Clayton Jarvis /MBN/ Feb 8, 2021. The economic upheaval triggered by COVID-19 may have taken its toll most directly on lower-wage workers - not exactly reverse mortgage's target demographic - but it's little surprise that Canadians nearing, or well into, retirement would want to access the equity in their homes as a way of supporting their children and grandchildren through an extended period of economic pain....Continue reading

HOW LONG DOES IT TAKE THE AVERAGE CANADIAN HOMEBUYER TO SAVE UP A DOWN PAYMENT? Source: By Ephraim Vecina /MBN/ Feb 5, 2021. National Bank of Canada has reported that a Canadian household occupying the average income bracket would need around 60 months to save the minimum down payment for a residential property purchase.... Assuming a 10% savings rate and a 6% down payment, this was the longest saving period calculated in around four decades. The reading significantly exceeded the previous record established during the housing bubble of the 1990s. This was despite the significant improvements in household purchasing power over the last few quarters. "At a national level, there has never been a worse time to accumulate the minimum down payment," National Bank economists Kyle Dahms and Camille Baillargeon wrote in their report. "Higher incomes and record-low interest rates were almost completely offset by a substantial rise in home prices." Considering the momentum built up in multiple Canadian housing markets during the second half of 2020, that price growth is not expected to stop any time soon. Canadian Imperial Bank of Commerce pegged this increase at 11.2% this year, while Royal Bank of Canada predicted an 8.9% gain in the benchmark housing price. "The pandemic changed some dynamics - it drove many buyers to the suburbs, exurbs and beyond, ground immigration to virtual halt, triggered a downturn in big cities' rental markets and caused households to build up their savings - but it didn't dial down the market's heat," RBC economist Robert Hogue said recently. "We expect this to largely continue in 2021."

NUMBER OF HIGH-VALUE MORTGAGES SPIKES IN TORONTO. Source: By Ephraim Vecina /MBN/ Feb 4, 2021. The number of mortgages in the $1 million to $3 million dollar range in Toronto has significantly swelled compared to levels seen prior to the pandemic, according to a recent analysis by LowestRates.ca.... "There were a lot of expectation that housing prices might suffer and people wouldn't take on large mortgages because the economy would be down and people would be worried about their savings and their jobs - but it's been the inverse," said Justin Thouin, founder and CEO of LowestRates.ca. According to Shawn Stillman, principal broker at Mortgage Outlet, a potent driver of this development was the work-from-home revolution, which pushed down household costs significantly. The prevailing environment of record-low rates and the federal government's financial assistance programs also significantly boosted the general public's purchasing power. "People are still looking around and have a lot of inquiries since rates have gone down," Stillman said. "The mortgage market is definitely fluid right now and it's healthy. It's not quite a buyer's market, and not quite a seller's market." Canadians' hoarding of cash further paved the way for greater loan amounts. Per Statistics Canada, the household savings rate spiked from 7.6% of disposable income in Q1 2020 to 28.2% during the second quarter, reaching its highest level since the 1960s. "All of a sudden people could be saving an extra few thousand dollars a month that's going toward their down payment," Stillman said. Moreover, continuous economic volatility has pushed the stock market into uncertain waters, and propped up housing as the safer investment choice. "All of those things have come together to create a perfect storm of these million-dollar-plus mortgages," Thouin said.

CIBC'S TAL ON WHAT WILL DRIVE POST-PANDEMIC DEMAND. Source: By Ephraim Vecina /MBN/ Feb 3, 2021. The sustained strength of the housing market, combined with a likely post-pandemic population boom, will inflame demand for rental units and long-term housing, according to Benjamin Tal of the Canadian Imperial Bank of Commerce.... The observed weakness in the rental market, especially in the downtown Toronto condo segment, is more along the lines of a "healthy softness," Tal argued. This is because the speculation that drove the feverish growth in Canadian urban markets over the past few years has recent been largely absent. "I don't see a collapse in the housing market. Prices are high and unfortunately, they will remain high even after COVID," Tal told Bloomberg. "That's the reality of the situation in the Canadian housing market until we fix the supply issue that is really impacting valuation in big cities." A significant driver of demand will likely be Canadian citizens returning from the United States and Hong Kong. Tal noted that this segment represented a "blind spot" in most housing forecasts. "We didn't know the numbers because, Stats Canada does not capture the number of people returning to Canada," Tal said. "They really do not distinguish between tourists and returning citizens." In another report, the StatsCan said that the growing number of Canadians moving away form urban core markets will be "an important trend to monitor." "The desire to live outside the largest urban centres was also reflected in the rapidly increasing housing costs in neighboring real estate markets, a trend that has continued in spite of the pandemic," StatsCan said.

TOP THREE MYTHS ABOUT ALTERNATIVE LENDING Source: By Kasi Johnston/MBN/ Nov 12, 2020 When the COVID-19 pandemic hit, banks and prime lenders became increasingly cautious given the unpredictability of the market pushing even more borrowers to seek information about alternative lending sources.... MYTH ONE:- ONLY PEOPLE WITH BAD CREDIT GO TO A PRIVATE/ALTERNATIVE LENDER Alternative lenders are non-bank financing companies that offer unconventional financing options to individuals and businesses who may not be able to get approval from a prime lender. While this includes borrowers with a challenged credit history, several other types of borrowers could benefit from alternative financing. "There are borrowers with excellent credit that choose private lenders," said Franca Tosti-Bulthuis, associate director of brokerage relations at CMI. "They may choose an alternative option because they are self-employed or want non-traditional terms. Sometimes, it has nothing to do with credit." Alternative lenders generally approve loan applications quicker than traditional lenders as well. While private lending was traditionally known for working with risker clients, Tosti-Bulthuis says the way people work has changed, their compensation structures have changed and the economy is evolving to include a lot more self-employed or freelance workers. These types of borrowers generally have a hard time qualifying for traditional financing, despite having good credit. MYTH TWO:- PRIVATE LENDERS CHARGE VERY HIGH, UNREASONABLE INTEREST RATES. Private lending may be more expensive and can sometimes come with more stringent terms, depending on how risky the loan is, but it's meant to be a temporary solution until the borrower can access more traditional financing, with lower rates and fees. Private lenders gained a bad rap in the past due to individual investors being a primary source of non-bank capital. They charged high interest rates and fees with little accountability and transparency. While the occasional bad actors may still exist, Tosti-Bulthuis says they are far and few between, and competition in the industry has driven increased accountability throughout the entire space. Private lenders also follow provincial guidelines and industry best practices. "Larger private lenders also have a reputation to uphold, which is a great reason to consider lenders like CMI rather than working with small independents who may not be around in a year's time," she said. MYTH THREE:- PRIVATE LENDERS CHARGE EXPENSIVE FEES AND DON'T RENEW Mature, trustworthy lenders openly disclose all their fees upfront and pride themselves on a transparent process. "Some small investor funds and MICs charge a full lender fee when it's time to renew because they have limited capital," she said. "At CMI, we have strong financial backing and want to keep the clients that are in good standing, so we never charge the full lender fee at renewal."

CANADIAN MORTGAGE DEBT BALANCE SEES FASTEST GROWTH SINCE 2018. Source: By Ephraim Vecina /MBN/ Nov 5, 2020 Canadian overall mortgage debt reached $1.71 trillion om September, representing a 5.67% annual increase that was the fastest pace since 2018, according to the central bank.... The Bank of Canada figures also showed that the national outstanding balance saw a 0.9% monthly uptick in September. "The 5.67% annual rate puts an end to three consecutive months of deceleration," real estate information portal Better Dwelling said in its review of the BoC data. "It's not just a new record, but a huge acceleration for growth." The September figures come in the wake of Q2 numbers from Statistics Canada that showed the ratio of national mortgage debt to GDP reaching 84.28%. To compare, the level was 69.13% of GDP during the same time last year, and 59.02% a decade prior. "That means during that period, mortgage debt grew over 40% faster than GDP," Better Dwelling said in a separate analysis. "Considering this ratio was just 39.62% in 2000, that's a huge increase. Especially if the economy doesn't just bounce back to pre-pandemic levels of activity soon." Meanwhile, the national household debt service ratio dropped from 14.54% to 12.4% during the first half of 2020. Household debt as a share of income also fell "from 175.4% to 158.2%, as household disposable income increased 10.8% and the stock of credit market debt remained relatively unchanged," StatsCan said. Together, these trends pushed average Canadian debt per capita up by 2.2% annually during the second quarter, reaching $73,532. Overall consumer debt went up by 2.8% during the same time frame to settle at $1.99 trillion, Equifax Canada said.

5 REASONS HOMEOWNERS REFINANCE THEIR MORTGAGE There has been a flurry of refinance activity this year given our rock-bottom interest rates, providing homeowners with access to today's low rates and the most cost effective way to get needed funds. Refinancing means getting out of your current mortgage and replacing it with a new one. A minimum of 20% home equity is required to complete a refinance. THERE ARE SEVERAL COMPELLING REASONS WHY HOMEOWNERS REFINANCE THEIR MORTGAGE:... 1) To get a lower interest rate. Refinancing to get a lower rate makes sense if the savings you achieve with the lower rate are greater than the cost of getting out of your existing mortgage. 2) A much-needed financial reset. Debt restructuring is one of the primary reasons homeowners refinance. If you have too much high-interest debt that is eating your monthly cash flow, you may be able to get the breathing room you need by rolling that debt into a new low-interest mortgage. You'll get one manageable monthly payment, immediate cash-flow relief, and long-term interest savings. It is also a great way to improve and protect your credit score. 3) Renovate. Homeowners are renovating to adapt to their new COVID-19 lifestyles; whether it's to improve the quality of their lives, or for functionality like a new home office. At the same time, your renovations can increase the value of your home, a nice added benefit. 4) Invest in the future. If you've found the perfect cottage or the retirement home of your dreams, refinancing may be the way to make that purchase happen if you're not quite ready to sell your primary residence. Or perhaps you are thinking rental property for a long-term wealth building opportunity and a source of retirement income. 5) You need funds. Yu may be able to get the funds you need for major expenses, like a new business, tuition, or wedding, often a better strategy than loading it all onto high-interest credit cards or unsecured line of credit.

BOC RENEWS COMMITMENT TO KEEPING RATES FROZEN AT RECORD LOWS Source: By Ephraim Vecina /MBN/ Oct 29, 2020 In its Oct 28 policy decision, the Bank of Canada reiterated its pledge towards record-low rates for the foreseeable future, with the benchmark rate to remain at the effective lower bound of 0.25% until around 2023.... Despite Canada having entered what the central bank called the "recuperation phase" from the COVID-19 crisis, the BoC is predicting an annual growth rate of a mere 1% this quarter. In its forecast, the bank also predicted that GDP won't see a return to pre-pandemic levels for at least two years, hence the need to keep in force policy tools such as quantitative easing. "The bank is maintaining its extraordinary forward guidance... recalibrating the QE program to shift purchases towards longer-term bonds, which have more direct influence on the borrowing rates that are most important for households and businesses," the BoC said in a statement. "At the same time, total purchases will be gradually reduced to at least $4 billion a week." This will be marked decline from the current $5-billion level. "The Governing Council judges that, with these combined adjustments, the QE program is providing at least as much monetary stimulus as before," the BoC said. Prolonged economic recovery will require "extraordinary monetary policy support" that will likely last until "economic slack is absorbed so that the 2% inflation target is sustainably achieved," the bank said. "We are committed to providing the monetary policy stimulus needed to support the recovery and achieve the inflation objective." "We forecast that the Bank of Canada will keep the overnight rate target on hold until the second half of 2023 owing to the magnitude of the output gap, our forecasts for demand based on current and expected stimulus, our resulting forecast for inflation, and the Fed's move to average inflation targeting," said Brett House, deputy chief economist at Scotiabank.

DLC'S COOPER: BOC RATE POLICY JUSTIFIED IN THE CURRENT ENVIRONMENT Source: By Ephraim Vecina /MBN/ Oct 30, 2020 The Bank of Canada's commitment to prolonged record-low rates is more than justified considering that the reopened economy ended up being strong but uneven, according to Sherry Cooper, chief economist at Dominion Lending Centres.... "Growth is estimated to have rebounded strongly in the third quarter, reversing about two-thirds of the decline observed in the first half of the year," Cooper said in a recently published analysis. " A sizable bounce back in activity resulted from a rebound in foreign demand, the release of pent-up demand for housing and some durable goods, and robust policy support. This led to a substantial recovery in housing activity during Q3, "supported by historically low financing costs, resilient incomes for higher-earning households, and extra sales and construction that made up for delayed spring activity," Cooper said. Cooper said that buyers coming back in force also compensated for the much-reduced activity during the peak of the COVID-19 pandemic's economic devastation in the spring months. Over 25% of respondents said that "they would like to move to a larger or single-family home because of the pandemic," Cooper said. "The strength of the housing market recovery, combined with a tight resale market, has led to the rapid growth of house prices in some markets. In contrast to the appreciation of house values observed in Toronto and Vancouver in 2016, price growth has been strongest in markets with moderate loan-to-income ratios, such as Ottawa, Montreal and Halifax." Still, taking all other economic factors into account, "interest rates will remain low for the foreseeable future," Cooper said. "The pandemic will largely determine the growth of the economy and the government's response," Cooper said. "Experts suggest that this second wave will last for much of the winter and that a widely dispersed vaccine will not be available until at least well into 2021. Output is likely to remain below pre-pandemic levels everywhere through the end of 2022, the Bank of Canada's forecast horizon."